Online gambling: Is it even legal?

It's often called a 'legal grey area' but we take a look at how grey it really is

In Canada, gambling falls under provincial jurisdiction, but offshore sites don't pay attention to boundaries. Thousands of offshore gaming sites are based in locales such as Gibraltar, the Isle of Man, and Cyprus. (Associated Press)

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Paul Haavardsrud

Paul Haavardsrud writes for CBC's western business desk in Calgary.
He is also a producer on CBC Radio’s national business desk where he talks about business on Radio One in the afternoons. Prior to that he worked for newspapers. On Twitter, he’s @paulhaavardsrud.

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Online gambling is often called a "legal grey area," but does that mean Canadians playing a few hands of internet poker in their living rooms should one day expect a SWAT team to crash through the door and seize their laptop?

The short answer is no. The longer answer, as might be expected, is less black and white.

Whether the issue is offshore gambling sites, file sharing, or Uber, the laws of the land are still taking time to catch up to the complexities of a connected world.

In Canada, gambling falls under provincial jurisdiction. That much is clear. The greyness stems from the internet, which doesn't pay attention to provincial boundaries. Thousands of offshore gaming sites are based in locales such as Gibraltar, the Isle of Man, and Cyprus, where gambling rules are wide open and governments welcome the tax revenue.

'I don't think [the law] is grey.'- Michael Lipton, lawyer

As for the legal status of these offshore operators in Canada, Michael Lipton, a lawyer and gaming law expert with Dickinson Wright in Toronto, says the issue is best understood by looking at the legality of offshore sites accepting bets from Canada, as well as what the law says about bets made by Canadians.

For gamblers, he doesn't see anything in Canada's Criminal Code that makes wagering through an offshore site illegal.

"As far as I'm concerned, you as a player aren't committing any criminal offence by being in a position where you are engaged with an offshore operator playing poker, playing slots, or whatever the case may be," Lipton says.

Provincial jurisdiction

The trickier part of the equation is the legality of offshore operators taking bets from Canada.

Prior to the internet, the legal ins and outs of gambling were more straightforward. Each province determined its own rules for gambling, whether casinos, bingos, or lotteries. An exception is horse racing, which is regulated by the Canadian Parimutuel Agency, a unit of the federal agriculture department.

Over time, every province except for Saskatchewan has moved towards online gambling.

B.C. began offering online lottery tickets and sports betting in 2004. It added poker in 2009 and online casino games and bingo a year later.

Manitoba and Quebec have a similar menu of online gambling options, as does Ontario as of January. Alberta is likely to join them later this year.

On the East Coast, the Atlantic Lottery Corp. oversees the sale of online lottery tickets and bingo for the Maritime provinces, but so far does not offer casino games such as poker, blackjack or slots online.

Aside from a few inter-provincial agreements, outside bettors are restricted from playing on provincial sites.

The legality of offshore gaming sites accepting bets from Canadians has yet to be tested in court. (iStockphoto)

Since gambling is a provincial concern, any legal uncertainty comes down to whether the Criminal Code prohibits offshore operators from doing business with Canadians.

The B.C. Supreme Court offered some clarity in 2001 in a case involving Starnet Communications International. The company, which had a gambling licence from Antigua, also kept an office in Vancouver. The court found that a Canadian-based gambling site couldn't legally accept bets from Canadians.

Offshore sites a click away

The part of the law that hasn't yet been tested in court concerns offshore sites that don't have a physical presence here. Just a click away for gamblers, is what they're doing illegal?

According to Lipton, the answer is yes.

"I don't think [the law] is grey," he says. "You may want to call it anything you call it, but I think I can point to a particular provision in the Criminal Code and I can tell an offshore operator, under the circumstances, that if you do such and such then you could be prosecuted under that particular section of the Criminal Code."

Until offshore gambling has its day in court, uncertainty will linger over its legal status. Lipton, however, says other cases, for issues such as copyright protection, show that foreign operators that maintain a substantial connection to Canada can be found to be violating Canadian law.

If an offshore site, for example, does business here – advertises here, enters into contracts and knowingly accepts bets from Canadians – then that would bring the operator under Canada's jurisdiction.

More to the point, since gambling is the sole purview of the provinces, offshore sites could be breaking Canadian laws every day.

Whether Canada chooses to enforce those laws is another matter.

Kahnawake Gaming Commission

To date, the RCMP hasn't brought a case forward against an offshore gambling operator. It's possible this could happen, but doing so would take time and resources not to mention navigating the complexities of international extradition.

An arguably more fraught aspect – whether from a legal, political, or law enforcement point of view – of prosecuting a case against an offshore site is the jurisdictional claims of the Kahnawake First Nation in Quebec. Just down the road from Montreal, it's not physically offshore, yet the Kahnawake Gaming Commission is one of the world's largest online gambling hosts.

For the RCMP to pursue an overseas operator may first require a serious legal and political engagement with First Nations territorial sovereignty. At best, that would mean a drawn out court case. At worst, memories of an Oka-style standoff serve as a warning.

Of late, Canadian law enforcement seems preoccupied with terrorism, drugs, and biker gangs. In that context, it's understandable to see why the RCMP, which didn't respond to requests for comment about Kahnawake gaming, may have put online gambling on the back burner.

Now that more provinces are committing to online gaming, it remains to be seen whether gambling will become more of a priority. Given the money that's currently flowing to offshore sites, though, reasons appear to be mounting for any legal grey areas to become more black and white.

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